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If you're looking to raise
money for your company, it's critical you understand your
risk profile. Here's why. Most investors and
lenders, like banks and venture
capital firms, are essentially professional risk managers;
they invest or lend money by managing
the risk that the money will be repaid or not. So, your job
when seeking capital is to reduce the investor or lender's risk
as much as possible.

The key to reducing risk is to identify and accomplish "risk
mitigating milestones." A risk mitigating milestone is an event,
that when completed, makes your company more likely to succeed.

Below are five key "risk mitigating milestones" that will reduce
the risk of your failure and thus make it significantly easier to
raise funding for your company:

1. Build a board of advisors.
One of the easiest risk mitigating milestones to accomplish is
building a board of advisors. This is a group of individuals who
agree to support and advise your company. Typically you do not
pay them cash, but often give them stock options to incentivize
them to help you.

Your advisory board is typically comprised of industry experts
and other professionals whose advice and connections can help you
grow the business. By building an advisory board, you show
investors that other successful people, often including industry
insiders, believe in your vision. Wise investors also know that
by soliciting the advice of experts, your company will become
more successful.

2. Secure beta customers.
Beta customers are non-paying customers who are willing to test
your product or service. Typically these customers are not going
to waste their time trying something in which they have no
interest. As such, beta customers prove there is a demand for
your product or service.

Equally, if not more importantly, beta customers tell your
company what they like and don't like about your product or
service, so you can make improvements before a public launch.
This market research is invaluable, and gives investors and
lenders comfort that your offering will truly satisfy customer
needs.

3. Forge partnerships.
Securing partnerships proves your viability and positions you for
success. For example, a distribution partnership could ensure
your offering will be able to reach the right customers. A
manufacturing partnership could prove your ability to develop
your product at a set cost.

In either case, signed partnerships also prove to investors that
others in and around your industry believe in your vision.

4. Secure publicity.
Media outlets will write about your company if, and only if, they
think their readers, listeners or viewers will care or benefit.
As such, if the media covers your company, it's a good indication
to investors that customers care about what you are doing. And if
customers care, there is a good chance they will purchase your
offerings in the future.

5. Generate revenue.
As you may have noticed, several of the risk mitigating
milestones above focus on showing that customers want what you
are offering. If there's enough customer demand for your product
or service, the chances of your success are much higher.

And the ultimate indication that customers truly want your
product or service is if they buy it. As a result, generating
revenues from customers is perhaps the strongest risk mitigating
milestone you can accomplish, and best positions you to raise
money from lenders and investors.

Showing lenders and investors that you have accomplished key risk
mitigating milestones will make it easier for you to raise money.
It is understandable that for certain business ventures, like
opening a new restaurant, you can't achieve all the milestones
(such as generating revenues) before you raise funding. In such
cases, try to accomplish as many risk mitigating milestones that
don't require outside funding as possible. For example, you could
develop your menu, survey customers in your area, and secure
permits and licenses to help prove your restaurant will succeed.

Get creative, accomplish these key milestones and both your
company and investors will benefit greatly.